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Craziness with job numbers with the High-Speed Rail project

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In the most recent public meeting July 15th, Fresno Supervisor Debbie Poochigian confronted Rail CEO Jeff Morales about whether the 450,000 promised jobs would materialize for the High-Speed Rail Project. He said they would. Then Morales reversed the tables and asked Poochigian for her evidence that they wouldn’t materialize.

In addition, just before the Fresno meeting held on July 15th, the HSR Public Relations person, Lisa Marie Alley was quoted as saying Fresno alone would have 100,000 jobs, that’s 20,000 per year for each of the five years. That’s 100,000 jobs just for Fresno.

In neither case was there discussion about job-years vs. jobs as explained in the high-speed rail Public Records Act response listed below.

The Authority’s response:

The Authority has responded to a public records request as to their source of jobs numbers claims. The following is their response today, July 23, 2014.

“The 2014 Business Plan discusses how these estimates were calculated, including an explanation of the job years issue for both of the instances you cite in your email. This information is in Section 7: Economic Impact, specifically Exhibit 7.3 Total Projected Employment from Construction of the System (Including Direct, Indirect and Induced Jobs) by Phase in Job Years (page 59). http://www.hsr.ca.gov/docs/about/business_plans/BPlan_2014_Business_Plan_Final.pdf

(The Authority does confirm the calculation of job years: Example: The jobs figures, just as those in the 2012 Business Plan, are presented in job-years or the equivalent of one full-time job for one person for one year. So, for example, 50,000 job- years over two years would be the equivalent of 25,000 full-time jobs each year. ) Note: if you consider a 10-year job a full-time job, that would make the figure 5000 10-year jobs.

"Section 7 of the 2014 Business Plan also provides a link to the April 2012 Economic Impact Analysis Report (http://hsr.ca.gov/docs/about/business_plans/BPlan_2012EIR.pdf).

This report explains several different methodologies used to reach employment estimates; construction specifically in Section 5: Jobs from Construction and other employment methodologies in Section 6: Productivity, Output, and Employment Impacts.

"The Business Plans and the associated reports are the documents relevant to job estimates that the Authority uses in the press. The employment estimates are the result of advanced economic analyses. The Authority understands that this subject can be confusing to the public, which is why we have the April 2012 Economic Impact Analysis Report posted to our website, so anyone who wants more information on this important topic can read about the methodologies used in our estimates.”

What others say:

But are they estimates and no one actually knows what the numbers are or what they won’t be so accurately projecting numbers is difficult that is, until it’s too late. History though does offer a trail of experience. Here is a Washington source that also explains the concept of Job-years that the Authority is using. http://watchdog.org/9195/white-house-invented-‘job-years’-metric-to-help-sell-stimulus/

The article from Watchdog.org says this, “President Obama, shown at a 2008 Raleigh campaign stop, created the ‘job-years’ concept to help sell his stimulus program. Gov. Bev Perdue, shown at a recent press conference, also is using it to try to gain support for a high-speed rail project.

“Backers of a $545-million, federally funded high-speed rail project in North Carolina got a valuable public-relations assist from the Obama administration in the form of a misleading counting technique that inflates potential job numbers by more than 300 percent.”

“For instance, if a single job is created for a project with a three-year duration, this, in the Obama-Perdue method of calculating jobs, would be three jobs, not just one. This method of counting has the obvious effect of inflating job projections in the minds of voters if the difference is not spelled out to the public when used.”

Bent Flyvbjerg, Professor at the University of Oxford, U.K. Research Director, PHD and expert in Mega Project design says, “job creation and other local economic benefits invariably used by proponents to justify the billions spent on such projects often do not materialize or are so weak that they can’t be measured outside the temporary jobs generated by construction itself, which may be substantial, but the benefits of which end the day the last construction worker leaves the site.

This issue was studied in earlier years and debunked but it is raising its ugly head again. In the San Jose Mercury news article, they took a crack at what the real numbers would be. Apparently they are based on a Washington DC formula noted above that regular people don’t understand. The Authority has not yet responded to a public records request to provide a backup to these numbers defended by Jeff Morales in the July 15, 2014 Fresno Board of Supervisors Meeting.

There have been various job numbers by the Authority and their devotees. Some were as high as a million jobs noted by Nancy Pelosi mentioned in the San Jose Mercury news article, others were 600,000 or 450,000 both commonplace quotes and the voters guide promised 160,000 construction-related jobs and 450,000 permanent jobs in related industries.

CARRD’s take:

Californians Advocating Responsible Rail Design (CARRD) took an objective look at the job claims, then back in 2009 and the number du jour was 600,000. Elizabeth Alexis, one of the co-founders of CARRD is an economist.

http://www.calhsr.com/wp-content/uploads/2010/12/CARRD-CHSRA-Jobs-Factcheck-v1.2.pdf She thinks the loss of jobs and the gain of jobs will be a wash. The Authority only talks about the jobs the project will generate not jobs that will be lost. Here is her 7-minute youtube in a Senate Hearing held on December 5, 2011 in which jobs are addressed in the first 3 minutes.

http://www.youtube.com/watch?v=mrWnwQuoryI

in the jobs article listed below Alexis says, “25 billion will generate the equivalent of 75,000 years worth of employment using the 3 jobs/$1 million ratio. Over the 10 years that planning and construction are expected to last, this would mean about 7500 more Californians to work each year. In addition, some of the raw materials used in construction might be produced in California. The total number of construction-related jobs could be 100,000-120,000 one-year jobs, which is the equivalent to 10 to 12,000 jobs that last the 10 years that construction is expected to last. “http://www.examiner.com/transportation-policy-in-san-francisco/jobs

San Jose Mercury News:

Here’s the Mercury news job count in December 2011: 60,000 total: There will be 20,000 construction workers and as many as 40,000 “spinoff” workers at a time.

After construction the Mercury News believes a total of 4,150, equal to the number of permanent employees who are projected to work on the railroad if it is fully built.

http://www.mercurynews.com/ci_196026

Peer Review Group explanation:

Lou Thompson, who leads the Peer Review group as their chairman, tries to explain the mystery behind the job numbers.

http://www.examiner.com/article/hsr-politics-the-politician-s-vs-the-public-s-view-of-the-project

Thompson has 40 years of experience in transportation and international consulting--he has studied this issue for a long time. He says in actuality the Authority quotes 100,000 job years, not jobs, in the newest draft business plan. Bottom line Thompson says “the basic rule of thumb being used is that $1 billion of investment involves about 20,000 job-years and therefore for a 5-year, $1 billion project, there might be 4,000 people (jobs) total working on the project per five years. Of these, about 1/3 might be directly involved, 1/3 might be indirect (suppliers, etc.) and about 1/3 could be anything, and they could be anywhere. But frankly any investment like building schools would do the same as railways,” says Thompson.

So the initial operating segment might see 4000 jobs, maybe 16 to 20,000 project-wide. Not 100,000 jobs for the first segment, not a million jobs for the project life.

Net jobs: New jobs minus the loss of jobs

And then there is the unaddressed question of net jobs. How many will you lose? For sure net jobs are not in the Authority’s plans. So in addition to displacing airline and auto market workers if indeed an impact is felt, the loss of jobs due to the destruction of businesses, farmland, dairies and rendering plants is real and left unaddressed. Manuel Cunha, President of Nisei Farmers League, spoke at a Central Valley High Speed Rail meeting May 7th, 2011, “I'm probably going to lose 35 or 40,000 year-round jobs in agriculture. Let's think about the farm workers that feed all of us, including Sacramento," said Cunha.

Again at the July 15, 2014 Fresno Board of Supervisors meeting, Anja Raudabaugh, Executive Director of the Madera Farm Bureau said that the county has laid off over 2000 people because of the anticipation of impacts from the rail project.

William Grindley and William Warren’s Report on Jobs:

Myth #4 – Lots and Lots Of Jobs –Maybe, But Not Probably Here

From the report it says- “You actually can tell a book by its cover! As the Great Recession bit in late 2008, the CHSR business plan’s cover shifted from all train to a job- generating juggernaut cover in 2009. CHSRA forecasted 600,000 jobs created over the course of construction and 450,000 ‘permanent’ jobs. This is four times more than 160,000 construction-related and 40% more than the 320,000 permanent jobs their earlier consultants predicted.

For hard-hit construction workers and their unions, this sounded like manna from heaven. What do the CHSRA forecasts mean? But CHSRA is not clear on whether those are jobs or person-years of jobs.

The difference in interpretation is extremely significant. If the CHSRA means 600,000 workers will be employed throughout construction, they differ sharply from what Bureau of Labor Statistics suggests – only 10-12,000 jobs for the duration of “the 10 years that construction is expected to last.

Alternatively if 450,000 permanent jobs means ‘forever,’ this represents 3% of the state’s entire workforce. Conversely, if ‘permanent’ were limited to the train’s first twenty years, then dividing the 450,000 assertion by twenty years suggests only about 23,000 permanent jobs; or about 0.2% of the workforce. A very big difference indeed.”

See Myth #4- http://www.cc-hsr.org/assets/pdf/16SixMythsofCAHSR.pdf

Conclusion:

But back to the bigger picture, the reality is since no one can prove how many jobs will be generated because there are so many variables, the Authority will propagate the highest number they can to garner support . If the project goes forward, it will be many, many years before the truth is known. At that time even if they are wrong, so what? There will be no consequences for those quoting a greatly exaggerated view of the truth. While history ultimately will give us a more realistic look, there will be no fines or prison sentences for a bad guess or greatly exaggerated numbers despite the major consequences to the public.

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